Quest Rare Minerals Ltd. (
TSX: V.QRM) said that it has entered into a non-binding Letter of Intent (LOI) with TAM Ceramics Group of NY, LLC (TAM), a leading U.S.-based marketer and manufacturer of zirconia chemical products.
The LOI specifies that TAM will agree to purchase from Quest up to 24,000 tonnes of zirconia annually which Quest expects to mine from its Strange Lake deposit, and that Quest will deal exclusively with TAM for the sale of this quantity of product.
According to the
Quest Rare Minerals press release, this constitutes 100% of Quest's anticipated annual zirconia production from Strange Lake.
The LOI also provides that TAM will coordinate with Quest to develop markets for zirconia.
The purchase and sale of zirconia contemplated by the LOI is subject to the execution of a definitive agreement between Quest and TAM which will include, among other things, the price of all zirconia to be sold and other material terms and conditions of the transaction.
Quest and TAM have agreed to negotiate the definitive agreement in good faith, with a view to executing it as soon as possible, but in any event no later than Dec. 31, 2014. The LOI provides that the definitive agreement will have an initial term of five years, with five possible renewal terms of five years each, for a total potential contract term of 30 years, covering the anticipated minimum 30-year production life for the Strange Lake deposit.
Quest is exploration company focused on the identification and discovery of new and significant rare earth deposit opportunities
On Tuesday, Quest soared 15% and was trading at $0.53 a share. The company had a market cap of $32.9 million, based on 62.2 million shares outstanding.